Foreign direct investment (FDI) in India is welcome, reassured the Finance Minister P. Chidambaram, as he addressed the Confederation if Indian Industry (CII) on its annual session earlier this week.

Putting to rest fears that FDI in India would be restricted, the Finance Minister was explicit that inflows must be sustained.

The Indian Government had recently put restrictions on External Commercial Borrowings (ECBs) by real estate developers to curtail inflationary trends.

As per the RBI, 812 real estate companies borrowed USD 20.24 billion of foreign capital between April 2006 and February 2007, as they come in easily at a lower cost.

The Finance Minister shared his concerns of arbitrary pricing by industry of late, and urged members to restrain prices.

Inflation is a fallout of the global trend of hike in prices of commodities, demand outstripping supply of essential items, and increasing public expenditure.

Chidambaram explained the government’s move to increase interest rates as an effort to balance supply and demand to control inflation.

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